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Identification of beneficial owners: Publication of the Decree implementing Ordinance n°2016-1335 of December 1, 2016 that strengthens French rules against money laundering and terrorist financing

Unlisted companies and legal entities required to be incorporated with the Register of Trade and Companies (RCS) and headquartered in France (in particular branches of foreign corporations established in France) have recently come under the obligation to disclose to the clerk of the Commercial Court the identity of their beneficial owner(s) as well as the way in which he/she/they exercise(s) control over the relevant company or entity.

Decree n°2018-284 of April 18, 2018 (finally!) specifies what is precisely meant by “beneficial owner (s)”.

Better late than never! Decree n°2018-284 of April 18, 2018 adopted in furtherance of Ordinance n°2016-1335 of December 1, 2016 that strengthens French rules against money laundering and terrorist financing, finally completes the transposition of Directive 2015/849/EU on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing as it specifies what is precisely meant by “beneficial owner (s)”[1].

“Beneficial owner (s)” is now defined in the French Monetary and Financial Code[2] as follows:

“Natural person(s) who either hold, directly or indirectly, more than 25 percent of the share capital or voting rights of the company, or who exercise, by any other means, a power of control over the corporation within the meaning of Article L. 233-3 I §3 and §4 of the French Commercial Code[3].”

Wherever it is impossible to identify a natural person as per these criteria, the beneficial owner (s) shall be:

These clarifications are fully in line with the terms of the Directive and the recommendations that had been released by the Association Nationale des Sociétés par Actions (French association of joint stock companies, referred to as “ANSA”) pending the publication of the Implementing Decree[4].

[3] “Any natural person or legal entity is deemed […] to control another company: […] §3 When it effectively determines the decisions made at that company’s general meetings through the voting rights it holds; §4 When it is a partner in, or shareholder of, that company and has the power to appoint or dismiss the majority of the members of that company’s administrative, management or supervisory boards.”